A lack of coordination between the Reserve Bank of India and the Departments of Commerce and Revenue that resulted in ineffective policies for trade in gold, precious metals and jewellery cost the Exchequer over ₹ 20,000 crore, said the country’ supreme auditor.
In a report tabled in Parliament on Friday, the Comptroller and Auditor General (CAG) said that the policies had a revenue implication of ₹1,003.37 crore along with systemic issues worth ₹ 19,522.67 crore and internal control matters which could not be quantified in the period 2011-2015.
“Since India did not produce…, the change in gold price, import regulation and export promotion schemes did not have material impact on the gold trade. This had led to India becoming the largest gold importer. Simultaneously, trade in rough diamond and CPD grew with insufficient value addition,” said the performance audit report.
The CAG also pulled up the Commerce Department for not facilitating exports of gems and jewellery. The Foreign Trade Policy 2015-20 also did not make any defining provision for the sector though the 20:80 scheme was withdrawn in 2014.
Similarly, the RBI, despite its mandate to regulate the external sector by regulating the foreign exchange allowed Star and Premier Trading Houses to import gold that led to significant outgo of foreign exchange by the sector, said the report.
The CAG also noted that total customs duty forgone was ₹ 12.26 lakh crore for the period 2010-11 to 2014-15 whereas the share of gems and jewellery sector in the was ₹ 3.04 lakh crore.
“Gaps in the valuation database management and Customs electronic data application allowed gradual increase in trade mis-invoicing over the period leading to foreign exchange/capital outflow,” it said while pulling up the Revenue Department and the Central Board of Excise and Customs.